Market Insights

Technology stocks like Apple just broke a three-week losing streak as investors started to nibble after a sharp pullback.

The Nasdaq-100 rose 2 percent between September 18, and Friday, September 25. Apple (AAPL), Amazon.com (AMZN), Nvidia (NVDA), PayPal (PYPL) and Zoom Video Communications (ZM) led the bounce. Most other sectors fell, handing the broader S&P 500 its longest negative streak in over a year.

Few important things happened on the news front, but incremental positives lifted certain stocks:

• AMZN jumped on an upgrade by Bernstein, amid reports it will hold its Prime day around October 13.
• Smaller social-media companies like Twitter (TWTR) and Snap (SNAP) approached new highs on signs of healthy user traffic.
• Nike (NKE) shot to new record territory after crushing earnings forecasts. Investors also loved its rapid transition to e-commerce.
• Solar-energy stocks jumped on positive results and analyst reports. They remain the year’s top-performing industry by a wide margin.

S&P 500 Holds Potential Support

The S&P 500 started last week by gapping downward, and remained below its previous range. However it also bounced after testing 3215, a potentially important chart level.

The index first held 3215 on January 31 after the first coronavirus pullback. It plunged through that level as the pandemic spread in late February. The price area would then become resistance in June and the first half of July. The same level offered support in late July before stocks broke out to new record highs.

Some technical analysts may also interpret this month’s price action as an “ABC correction.” That’s when a chart is trending higher and runs out of momentum. As it declines, there’s often a second drop to lower levels before buyers return. The S&P 500’s lows on September 11 and September 24 could potentially fit that ABC pattern. (See chart above.)

Housing Strong, Other Data Weak

Last week didn’t have much economic news, but housing data remained strong. New home sales for August rose above 1 million (annualized) for the first time since November 2006. Existing home sales were the highest since December of the same year.

Initial jobless claims, on the other hand, unexpectedly rose. Durable-goods orders also missed estimates by a huge margin.

The crude-oil glut also continued, giving energy stocks their biggest weekly drop (-10 percent) since early June.

Financials also plunged amid reports that major banks including JPMorgan Chase (JPM) had defied money-laundering rules.

Here Come Payrolls

This week brings several big economic reports and the end of the third quarter. There could also be news on another coronavirus-stimulus bill from Congress.

Today is quiet but tomorrow features consumer confidence. Micron Technology (MU) reports earnings after the closing bell.

ADP’s private-sector non-farm jobs report is due Wednesday morning, along with oil inventories. It’s also the last day of the quarter.

Jobless claims and the Institute for Supply Management’s manufacturing index follow on Thursday. Personal income and spending are due as well, along with PepsiCo (PEP) earnings.

The week ends with the Labor Department’s key non-farm payrolls report and unemployment rate on Friday morning.